WIRELESS COMMUNICATIONS Number portability to shake up carriers

Smaller companies are expected to benefit from the new cell phone rule.
CHICAGO TRIBUNE
CHICAGO -- When cell phone customers can keep their numbers after changing carriers, expect a herd of users to switch providers.
But the loudest roar is likely to come from business users with corporate accounts.
The new rules allowing for number portability will lead to fat discounts and shifting control of cell phones used for business, industry insiders predict.
"It will turn the wireless world upside down," said Susan Cheney, Midwest vice president for Sprint PCS.
Wireless, not surprisingly, continues to gain in popularity among business customers, yet companies have been slow to get a handle on this growing expense, said Greg Carr, chief executive of Teldata Control Inc., a firm that advises businesses on telecom service purchases.
It's common for executives and salespeople to buy their own cell phones and then to submit expense accounts covering the monthly charges, he said. But it's less common for businesses to contract with a wireless carrier to offer service at a substantial discount, he said.
"Wireless has crept into the corporate cost structure through the back door," said Nick Wray, a Teldata Control vice president.
Here was the problem
Corporate control was stymied because workers didn't want new numbers with a new wireless service. They fear losing business contacts who have their old cell phone numbers.
With the number portability deadline looming Nov. 24, expect businesses to make substantial changes in how they view cell phones.
Now, users can keep their old numbers with a new carrier and corporations will centralize and control their use, Wray said. Businesses will give all their business to one or two carriers and demand hefty discounts in return.
In the United Kingdom, where number portability was enacted years ago, corporate customers typically get discounts of 40 percent to 50 percent, Wray said, while in the United States, the average corporate discount is 15 percent to 20 percent.
Still, most corporate customers are not aware the change -- and how they could benefit -- is coming, Carr said.
"I just met with the communications manager at one of the nation's top banks," said Carr. "He was totally unaware of the change and how it would affect his business."
Opposite views
Most wireless carriers see portability as a threat, but some also view it as an opportunity, said Chris Carrington, chief of Telecom Media Networks, which provides advice to carriers.
"Some of our clients that have adopted a culture that this is an opportunity are positioning their sales force to go after the enterprise customer," said Carrington.
Carriers that are defensive about number portability seek to lure customers into long-term contracts now, said Debbie Stipe, a senior manager at Telecom Media Networks, which is a unit of Cap Gemini Ernst & amp; Young.
Nextel Communications Inc., which traditionally has catered to business customers, says number portability is an opportunity to win customers.
"We currently take 90 percent of our customers away from other carriers," said Leigh Horner, a Nextel spokeswoman. "We think we're going to continue that, and we think we will be winners with number portability."
Another competitor, Chicago-based U.S. Cellular Corp., also expects to win more customers, said John Rooney, the firm's chief executive.
Still, he has some reservations about portability.
"From the technical standpoint, I worry if the industry is ready," said Rooney, who was an executive with Ameritech when number portability was implemented for traditional phones in the 1990s. "We had troubles with it on the landline side, and there are more issues with wireless."
Influence of 'churn'
All wireless customers should benefit from improved service and lower prices as carriers strive to avoid losing business, known to the industry as "churn," said Jeff Kohler, director of wireless banking services at Bathgate Capital Partners in Denver.
In general, Kohler said, larger carriers such as Verizon, Cingular Wireless and AT & amp;T Wireless are more vulnerable to churn because they have more customers to lose, while smaller carriers like Nextel, T Mobile and U.S. Cellular are aggressively trying to win new customers.
Because carriers are locking up as many customers as possible with long-term contracts, churn related to number portability could be spread over the next few years as customers wait until contracts expire to make changes.
But wireless carriers won't be able to halt the trend toward lower prices, said Carr of Teldata Control.
"We're going to see more competitive pricing," said Carr. "It will look like long-distance pricing trends that started years ago."